Currency Updates:
The AUD continued its broad recovery overnight making solid gains against all of the other majors. Turnover was very heavy and it was AUD/JPY which again led the way. The easing of international tensions surrounding Syria has encouraged many to reduce their ‘risk-aversion’ hedges. There isn’t much of note on today’s economic calendar and we will again rely on positional adjustments for any movements.
TECHNICALS: The daily chart is showing that previously pivotal resistance levels at .9335 are again coming into view (see chart). A clean break above there brings the 38.2% retracement of the entire down-leg into view, and that comes in at .9510. Short-term momentum remains very bullish and the lack of any significant dip is a very telling factor.
CROSSES: Yesterdays reversal in the AUD crosses was very short-lived and the AUD made fresh short-term trend highs against the EUR and the JPY. AUD/JPY is going up the elevator and down the stairs, typical of a strong up-trend, but resistance levels will be firmer near 93.65/70 (see chart). Next support levels in the EUR/AUD are near 1.4190/1.4200.
AUD/NZD remains in sideways mode but buying dips still favoured in short-term for a test of 1.1760.
ORDERS & FLOWS: Local bank reports still heavy selling interest in AUD/USD ahead of .9350. There are likely to be heavy stops above there.
INTRADAY CONCLUSION: AUD bulls are back in control and if big resistance levels (like .9350 in AUD/USD and 93.70 in AUD/JPY) can be overcome then we should see further swift gains. I booked profit on my long position as I feel it’s a bit overdone in short-term but I would not recommend going short just yet.
TRADE OF THE DAY: Got the EUR/AUD wrong yesterday so best avoid that again. Buying intraday dips in USD/JPY towards 100.00 with stops below 99.50 makes good risk-reward sense and I also really like the long GBP/USD play, but that’s more medium term.
